Question 1

What is Bank for Agriculture and Agricultural Cooperatives (BAAC)?

Accepted Answer

Bank for Agriculture and Agricultural Cooperatives (BAAC) is a government-owned specialized financial institution in Thailand dedicated to serving the agricultural sector. Established to provide affordable credit and financial services to farmers, farmer associations, and agricultural cooperatives, BAAC operates as Thailand's primary rural development bank.

The institution is 99.79 percent owned by the Thai Ministry of Finance and operates under the supervision of the Ministry of Finance. BAAC has evolved from a basic agricultural lender into a comprehensive rural development bank offering both lending and deposit services nationwide.

Question 2

When was Bank for Agriculture and Agricultural Cooperatives (BAAC) founded?

Accepted Answer

BAAC was founded on November 1, 1966, under the Bank for Agriculture and Agricultural Cooperatives Act. The bank replaced the former Bank for Cooperatives, which had been established in 1947 but was limited in funding and restricted to lending only to agricultural cooperatives.

The bank's first president, Mr. Chamnian Saranaga, played a crucial role in establishing the solid foundation of BAAC's operations and pioneering development areas that ensured equitable growth. He also established governance principles known as BAAC's ethics, enabling staff at all levels to perform their duties efficiently without conflicts of interest among stakeholders, particularly client farmers.

Question 3

Where is Bank for Agriculture and Agricultural Cooperatives (BAAC) headquartered?

Accepted Answer

BAAC is headquartered at 2346 Phahon Yothin Road, Sena Nikhom, Chatuchak, Bangkok 10900, Thailand.

Question 4

Where does Bank for Agriculture and Agricultural Cooperatives (BAAC) operate?

Accepted Answer

BAAC operates throughout Thailand with an extensive nationwide network serving all rural and agricultural areas across the country. As of fiscal year 2014-2015, the bank maintained 1,327 branches, 1,074 service bureaus, and 2,001 ATMs across Thailand's 77 provinces.

The bank has regional administration departments covering the northern, northeastern, central and eastern, and western and southern regions of Thailand. Each regional office oversees provincial branches, sub-branches, and field offices at the district level, ensuring comprehensive coverage of rural communities.

Question 5

What services does Bank for Agriculture and Agricultural Cooperatives (BAAC) offer?

Accepted Answer

BAAC provides a comprehensive range of financial services tailored to the agricultural sector and rural communities:

Deposit Services: Savings accounts, special savings products, time deposits, current accounts, and lottery savings designed to mobilize rural savings.

Credit Services: Short-term and medium-term agricultural loans, cash credit lines, loans for farm product marketing postponement, and financing for agricultural cooperatives. The bank offers innovative joint liability group lending for farmers without traditional collateral.

International Business: Trade services including Letter of Credit (LC) advice, Export Bill Collection (EBC), shipping guarantees, delivery orders, and forward contracts. International remittances including outward and inward transfers, Thailand-Laos remittances, and Western Union money transfer services. Currency exchange services.

Digital Services: BAAC Mobile application for banking on-the-go, online banking platforms, and extensive ATM network coverage.

Specialized Programs: Green Bond initiatives supporting sustainable agriculture, agricultural marketing cooperative support through Thai Agribusiness Company Limited (TABCO), and financing for cottage industries and non-agricultural activities in rural areas.

Question 6

What makes Bank for Agriculture and Agricultural Cooperatives (BAAC) unique?

Accepted Answer

BAAC is internationally recognized as one of the few successful government-owned specialized agricultural banks operating profitably without government subsidies. Several features distinguish the institution:

Joint Liability Groups: BAAC pioneered an innovative loan guarantee mechanism based on joint liability groups, allowing small farmers without land or traditional collateral to access credit. This financial innovation has enabled greater financial inclusion in rural areas.

Progressive Interest Rate Policy: The bank employs cross-subsidization with higher interest rates on larger loans, allowing it to serve low to medium-income farmers affordably while maintaining financial sustainability.

Sufficiency Economy Philosophy: BAAC has embedded Thailand's Sufficiency Economy philosophy into its operations, promoting sustainable farming practices, household accounting, and community development programs that strengthen rural communities' self-immunity.

Agricultural Marketing Support: Through its 10% stake in Thai Agribusiness Company Limited (TABCO), BAAC helps Agricultural Marketing Cooperatives (AMCs) gain bargaining power in farm supply purchasing and product marketing.

Tax Benefits and Funding Structure: BAAC is exempt from certain taxes including income tax and from reserve requirements. The Bank of Thailand requires commercial banks to invest at least 20% of deposits in agriculture, with most banks channeling funds through BAAC, providing a consistent funding source.

Rural Development Focus: Beyond lending, BAAC supports agricultural infrastructure, quality farm inputs, marketing linkages, and technology transfer to improve farmers' livelihoods sustainably.

Question 7

What type of financial institution is Bank for Agriculture and Agricultural Cooperatives (BAAC)?

Accepted Answer

BAAC is classified as a Specialized Financial Institution (SFI) in Thailand. SFIs are state enterprises established by acts of Parliament to achieve specific government policy objectives.

Unlike commercial banks, BAAC was originally mandated exclusively for agricultural lending, though its scope has expanded over time. In March 1993, BAAC was authorized to lend for agriculturally-related activities including cottage industries, and more recently for non-agricultural activities supporting rural development.

As a specialized development bank, BAAC combines development-oriented mission objectives with commercial banking sustainability, operating under the supervision of the Ministry of Finance rather than being purely regulated as a commercial bank by the Bank of Thailand.

Question 8

How does Bank for Agriculture and Agricultural Cooperatives (BAAC) support sustainable agriculture?

Accepted Answer

BAAC has integrated sustainability into its core operations through several initiatives. The bank issues Green Bonds to finance environmentally friendly agricultural projects and promotes "Go Green" policies throughout its lending portfolio.

The institution provides financial education based on the Sufficiency Economy philosophy, teaching farmers household accounting, sustainable resource management, and community-based development. BAAC supports the transformation of farmers and their heirs into "smart farmers" equipped with modern agricultural knowledge and technology.

Through its extensive network, BAAC facilitates access to quality farm inputs, agricultural infrastructure development, and market linkages that help farmers adopt sustainable practices while improving productivity and profitability.

Bank for Agriculture and Agricultural Cooperatives (BAAC)

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About Bank for Agriculture and Agricultural Cooperatives (BAAC) in Thailand

Bank for Agriculture and Agricu­ltural Cooper­atives (BAAC)